Energy ETFs Continue Their Pullback

Oil weighed heavily on trading for the second straight session. On Tuesday the price of a barrel of crude dropped after Hurricane Gustav came and went without causing considerable damage to the energy platforms in the Gulf of Mexico. But on Wednesday, concerns about Mother Nature were replaced by larger ones about decreasing demand due to a slowing global economy and a strengthening dollar. Oil dropped about 30 cents a barrel to the $109 level. It hasn't been that low since the spring.

Meanwhile, traders grappled with a weak Beige Book report (the Beige Book is a compilation of Federal Reserve local economic data), a lowering of guidance at Corning (GLW) that dragged down the tech sector and a decent Commerce Department report that showed an increase in manufacturing orders in July.

Financials showed some life as it looked as though Lehman Brothers (LEH) may finally find a suitor and Ambac Financial Group (ABK) will be allowed to reactivate a municipal bond insurance business. Its shares jumped 25%. Insurance companies also moved higher after it became apparent they wouldn't be on the hook for big damages related to Hurricane Gustav.

The Dow Jones Industrial Average gained 17 points to close at 11,534.

The rally in financials trickled down to smaller bank chains. The SPDR KBW Regional Banking ETF (KRE) gained 3.7% in moderate trading. The iShares Dow Jones U.S. Insurance ETF (IAK) gained 2.1%.

The second-straight pullback in the price of crude and concerns about a global economic slowdown put a damper on the performance of the larger energy and commodities industries. The Market Vectors Coal ETF (KOL) lost 7.5%. The SPDR S&P Metals & Mining fund (XME) dropped 3.7%.

The downturn in oil also impacted an unlikely sector: solar. Oil and solar ETFs almost trade in lockstep, since higher oil prices almost always lead to a dialogue on alternative sources of energy. Of course, when oil gets cheaper the traders bail. The Claymore/MAC Global Solar Energy ETF (TAN) decreased 5.4%.

Launching Pad
Van Eck announced the release of its Market Vectors RVE Hard Assets Producers ETF. This fund tracks an index of 321 companies in 40 countries that are involved in the production of hard assets in the energy, agriculture, base metals, precious metals, forest products, water and renewable energy sectors. Jim Rogers, the noted commodity investor, had a hand in the index’s design. It will charge an annual expense ratio of 0.65%.

On The Horizon * Invesco PowerShares announced it will probably begin trading its Global Biotech Portfolio ETF on Sept. 18. This fund will track a Nasdaq index of biotech firms, including Amgen (AMGN), Gilead Sciences (GILD), Genentech (DNA) and Celgene (CELG). The company is working on a series of launches for that date.

Earnings & Conference Calls
Thursday: Cascade, Ciena, Jackson Hewitt, Take-Two, Toll Bros.

Economic Data
Thursday
8:30a.m. Initial Jobless Claims
8:30a.m. 2Q Revised Productivity
8:30a.m. 2Q Revised Unit Labor Costs
10:00a.m. August ISM Non-Manufacturing Composite Index
10:00a.m. Business Barometer

A look at how the industry's most popular ETFs did on Wednesday.